People with disabilities may at times need government assistance. Especially in the case of Medicaid, these programs have rigid income restrictions, putting those who receive assistance at risk of losing their benefits should a family member give them money, property, or asset that can affect their income. Also, being awarded a settlement from a personal injury lawsuit could result in a loss of program eligibility or a significant reduction in their disability benefits. If you or a family member are in this predicament, then a Special Needs Trust attorney can help you find a viable solution.
What Is A Special Needs Trust?
Under the New Jersey Medicaid program, a “Supplemental Needs Trust” or “Special Needs Trust” (SNT) is a trust created for the sole benefit of a disabled person before the age of 65. Its purpose is to allow beneficiaries to supplement their income without affecting their eligibility to receive disability assistance received from local, state, or federal government agencies, mainly Medicaid and/or Supplementary Social Security (SSI). An SNT can be established by the disabled individual’s parent, grandparent, legal guardian, or by the court. There are Special Needs Trust attorneys who specialize in helping clients secure SNTs for their disabled family members.
What Are The Conditions Of A Special Needs Trust?
Under the laws of New Jersey, an SNT must meet specific criteria. This includes, but not limited to the following:
- Trust has to contain the assets of an individual, including gifts.
- All deposits made to the trust must be done before the beneficiary turns 65
- The beneficiary must be disabled as defined by 42 U.S.C. 1382c(a)(3)
- The trust can only be for the sole benefit of its beneficiary.
- The New Jersey Medicaid program must be fully reimbursed for all the Medicaid payments received during the beneficiary’s lifetime.
Are There Any Disadvantages Of A Special Needs Trust?
As is the case with arriving at a solution, no option is perfect. SNTs do present circumstances which should be carefully considered before being pursued. First, control of the trust lies squarely with the trustee and not the beneficiary. This will limit the beneficiary’s independence and they will have to rely on the trustee. Second, when the beneficiary dies, Medicaid must be fully repaid for the monetary assistance provided, which for most people, means the trust’s funds will be completely depleted. Finally, the cost of setting an SNT isn’t cheap and involves significant recurring fees.
Still, given what’s at stake, the advantages of an SNT, will in most cases, outweigh the drawbacks. Furthermore, the one thing that these trusts provide which cannot be denied is peace of mind. Knowing that your disabled loved one will be taken care of regardless of what happens to you, is in itself enough reason to seriously consider creating an SNT.
Choosing a Trustee for a Special Needs Trust
The most important things to look for in a Supplemental Needs Trust or Special Needs Trust (SNT) trustee are that they should be trustworthy and intelligent. They should also be able to maintain good records and take their responsibilities seriously. Matus Law Group has a team of experienced attorneys who may be able to help trustees properly manage the SNT. The responsibilities of being a trustee for SNT are very serious. If the trustee fails to properly administer the SNT, beneficiaries may lose their benefits or have to repay the government.
A Supplemental Needs Trust trustee must have great discretion. Keep in mind, that if a spouse or a beneficiary is named as the trustee, means-tested benefits may be jeopardized. On the other hand, as long as parents, children, and others are trustworthy and can manage finances, they could be good trustees.
Although a Special Needs Trust trustee can charge a fee, family members may waive this. The trustee may also hire accountants, lawyers, financial advisors, and other professionals on the trust’s behalf. A bank, lawyer, or any other professional may be the best choice to become a trustee in certain cases, especially when there are large trusts. Sometimes, trustees are also appointed by non-profit organizations.
Management of a large Special Needs Trust is an enormous responsibility, especially for a first-party SNT. It also carries significant obligations. Trustees must be wise investors, meet tax requirements, and comply with all laws regarding Medicaid or other means-tested benefits. Busy private individuals don’t always have the expertise and time to do this task, so if you are looking for a trustee of a large trust, a professional may be a better choice.
Work With A Top-rated Special Needs Attorney
SNTs are an effective tool for families to assist adults with disabilities to streamline their everyday living expenses and preserve vital sources of government assistance they receive. To decide whether or not an SNT is right for a member of your family, you should seek the services of a reputable Special Needs Trust attorney in New Jersey, contact Christine Matus at the Matus Law Group to schedule an appointment.